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Keynesian Economics vs. Regular Economics

Food stamps and other transfers aren't necessarily bad ideas, but there's no evidence they spur growth.

By

Robert J. Barro

Updated Aug. 24, 2011 4:53 p.m. ET

Keynesian economics—the go-to theory for those who like government at the controls of the economy—is in the forefront of the ongoing debate on fiscal-stimulus packages. For example, in true Keynesian spirit, Agriculture Secretary Tom Vilsack said recently that food stamps were an "economic stimulus" and that "every dollar of benefits generates $1.84 in the economy in terms of economic activity." Many observers may see how this idea—that one can magically get back more than one puts in—conflicts with what I will call "regular economics." What few know is that there is no meaningful theoretical...